Key facts
- CryptoQuant advised Strategy to pause Bitcoin purchases due to dividend coverage dropping to 14 months.
- Strategy's cash reserves are approximately $1.4 billion, down 38% year-to-date.
- CBOE is exploring the conversion of its Bitcoin and Ether futures into perpetual contracts.
- Zcash miner Fortitude will merge with HeartSciences to list on Nasdaq.
- Chainlink is participating in Project Pangea to study stablecoin-based FX settlement with banks.
Crypto analytics firm CryptoQuant has advised Michael Saylor's Strategy to pause its Bitcoin accumulation due to a significant drop in dividend coverage, which has fallen to 14 months from approximately seven years. This warning highlights concerns about the sustainability of Strategy's financing model, especially as its cash reserves have dwindled and preferred share issuances with high yields have increased annual dividend obligations.
Strategy's cash position has reportedly fallen to around $1.4 billion, a 38% year-to-date decrease, despite recent share sales and repurchases of senior notes. The company's ability to raise capital through preferred stock is also under pressure, as these shares have traded below their par value. The situation draws attention to the funding structure supporting Strategy's aggressive Bitcoin buying.
In other industry developments, the Chicago Board Options Exchange (CBOE) is reportedly considering converting its existing Bitcoin and Ether futures contracts into perpetual futures. This move follows recent regulatory approvals for similar products by the U.S. Commodity Futures Trading Commission (CFTC). Perpetual futures, which lack expiration dates, allow for indefinite leveraged positions and have gained popularity in the crypto market.
Meanwhile, Zcash miner Fortitude Mining Holdings is planning to become a publicly traded company through a merger with medical technology firm HeartSciences. This all-stock transaction aims to provide Fortitude with a Nasdaq listing without a traditional initial public offering. The combined entity will operate under the Fortitude name.
Additionally, Chainlink has joined a cross-border banking initiative called Project Pangea, alongside European and South Korean financial institutions. The project aims to explore the use of regulated euro and won stablecoins for real-time foreign exchange settlement, potentially improving efficiency in wholesale financial markets.